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Tight Oligopolies: In Search of Proportionate Remedies

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Author Info
Marcel Canoy
Sander Onderstal

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Abstract

Tight oligopolies are oligopolies of which the market characteristics facilitate the realisation of supranormal profits for a substantial period of time. We entangle the link between market structure and the possibility of welfare reducing behaviour by firms. A useful distinction can be made between 'unilateral effects' (oligopolistic firms realise supra-normal profits without co-ordinating their strategies) and 'co-ordinated effects' (oligopolistic firms realise supra-normal profits by co-ordinating their strategies).

The study develops a 'diagnostic approach', a tool that helps policy makers finding proportionate remedies to tight oligopolies: (1) 'prevent' a market from becoming a tight oligopolies; (2) ‘cure' a currently tight oligopoly by changing the market structure; and (3) treat the symptoms of an established tight oligopoly. We apply this diagnostic approach to six cases of (potentially) tight oligopolies: the Airtours case, health care, retail banking, mobile telecommunications, petrol, radio frequencies.

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Paper provided by CPB Netherlands Bureau for Economic Policy Analysis in its series CPB Documents with number 29.

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Related research
Keywords: oligopoly; tight oligopoly; market; antitrust;

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Find related papers by JEL classification:
L4 - Industrial Organization - - Antitrust Issues and Policies
L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Leon Bettendorf & Stephanie van der Geest & Gerard Kuper, 2005. "Do Daily Retail Gasoline Prices adjust Asymmetrically?," Tinbergen Institute Discussion Papers 05-040/2, Tinbergen Institute. [Downloadable!]
    Other versions:
  2. Machiel Mulder & Victoria Shestalova & Marc Lijesen, 2005. "Vertical separation of the energy-distribution industry," CPB Documents 84, CPB Netherlands Bureau for Economic Policy Analysis. [Downloadable!]
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